Resources for Massachusetts Small Businesses, Nonprofits & the Self-Employed During COVID-19
**This page was last updated on April 23rd. More information will be added as it becomes available.
The coronavirus crisis is placing a tremendous strain on the small businesses which serve as the backbone of our economy. As the son of small business owners and a supporter of eating, shopping, and spending locally, I’m deeply concerned by the impact the coronavirus pandemic is having on employers and employees here in Massachusetts.
My office has received questions about assistance available to small businesses, and we put together this guide to help you navigate your options during these uncertain times.
Over the past month, Congress passed, and the President signed into law, three major emergency relief packages designed to help those affected by the coronavirus. There are major provisions for small businesses in the bills — here’s what you need to know about these programs.
PAYCHECK PROTECTION PROGRAM
A new loan program for small businesses to help them retain employees during the COVID-19 pandemic.
The Paycheck Protection Program provides loans designed to help small businesses keep their workers on payroll. These loans will be completely forgiven if all employees are kept on payroll for eight weeks and the money can be used for either payroll, rent, mortgage interest, or utilities.
You can apply through any existing SBA 7(a) lender (you can find a list of Massachusetts lenders here.) The SBA is working on approving and enrolling additional regulated lenders in the program.
Who is eligible?
Any small business with less than 500 employees, 501(c)(3) non-profit organizations, 501(c)(19) veterans organizations, and Tribal businesses are all eligible to apply.
What if I am a sole proprietor or independent contractor?
Yes — your wages, commissions, income or net earnings will be capped at $100,000 on an annualized basis.
What can I use this loan for?
Payroll costs, interest on mortgage obligations, rent, and utilities.
What is included under payroll costs?
Salary, wages, commissions, tips; employee benefits — costs for vacation, parental, family, medical, or sick leave; state and local taxes assessed on compensation.
What if I already laid off my workers?
As long as you hire back your workers before you receive the loan, it can still be forgiven. The program uses February 15, 2020 as the date for calculating pre-pandemic payroll.
Can part-time workers and independent contractors be included in my payroll calculation?
No — independent contractors and gig workers are not covered in payroll calculation. They are eligible to apply for their own PPP loans.
How do I find lenders participating in the Paycheck Protection Program?
The SBA has a search tool to help you locate nearby lenders. Additional lenders are currently being added to the program.
What do I need to apply?
You will need to complete the PPP loan application and submit the application with any required documentation to an approved lender.
What is the application deadline?
June 30, 2020.
What if my loan is only partly forgiven?
You will have two years to pay off the balance at a 1% interest rate — payments are postponed until six months after the loan is disbursed.
You can find more detailed information about the Paycheck Protection Program online here.
You can also find more information for borrowers, as well as a detailed fact sheet from the U.S. Department of the Treasury for both lenders and borrowers.
ECONOMIC INJURY DISASTER LOANS & EMERGENCY ECONOMIC INJURY GRANTS
An existing emergency loan program that has been updated and expanded by the CARES Act that Congress passed.
Economic Injury Disaster Loans are low-interest, fixed rate loans of up to $2 million that are meant to provide immediate assistance with expenses during an event such as a pandemic.
To supplement these loans, Congress created Emergency Economic Injury Grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of successful application of an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not have to be repaid under any circumstance — regardless of the loan decision. It may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Any small business with less than 500 employees, private non-profit organizations, cooperatives, ESOPs, and Tribal businesses are all eligible to apply.
Here is a checklist of what you will need to apply for an Economic Injury Disaster Loan
You can apply online for an Economic Injury Disaster Loan here.
Who is eligible?
Any small business with less than 500 employees, 501(c)(3) non-profit organizations, 501(c)(19) veterans organizations, and Tribal businesses are all eligible to apply.
What if I am a sole proprietor or independent contractor?
Yes — your wages, commissions, income or net earnings will be capped at $100,000 on an annualized basis.
Does this program offer loan forgiveness?
Partially — after successfully completing an application for the program, businesses can request a loan advance of up to $10,000. This advance does not have to be repaid.
When do I get the money?
The loan advance is meant to be disbursed within three days after successful application by an owner who self-certifies for the aid. It typically takes one to two weeks for the SBA to make a decision, and up to a week after that for the loan check to be disbursed.
How much can I borrow?
The SBA will determine how much you can borrow using a formula intended to approximate six months of your operating expenses. This will be calculated by generally subtracting the cost of goods sold from revenue — the loan amount will be up to half of that sum.
What can the money be used for?
The only restriction is that these loans cannot be used to refinance previous loans.
What do I need to apply?
You will need to complete the online loan application. The SBA may request additional materials, including federal tax returns and a year-to-date profit-and-loss statement during the processing period.
What is the application deadline?
Portions of the program, including the loan advance, end on December 30, 2020.
SBA EXPRESS BRIDGE LOANS
The Express Bridge Loan Pilot Program is an existing program that allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for an Economic Injury Disaster an. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
SMALL BUSINESS DEBT RELIEF PROGRAM
This program will provide immediate relief to small businesses with non-disaster Small Business Administration loans, in particular 7(a), 504, and microloans.
The Small Business Administration will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
- The Small Business Administration will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.
- The Small Business Administration will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
Which Small Business Administration loans are eligible for debt relief under this program?
7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans. Disaster loans are not eligible (see p. 7 for more information on these).
How does debt relief under this program work with a Paycheck Protection Program loan?
Borrowers may separately apply for and take out a Paycheck Protection Program loan, but debt relief under this program will not apply to a Paycheck Protection Program loan.
How do I know if I’m eligible for a 7(a), 504, or microloan?
In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a sound business purpose. To check whether your business is considered small, you will need your business’s 6-digit North American Industry Classification System (NAICS) code and 3-year average annual revenue. Each program has different requirements, see https://www.sba.gov/fundingprograms/loans for more details.
What is a 7(a) loan and how do I apply?
7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender. The Small Business Administration has a free referral service tool called Lender Match to help find a lender near you.
What is a 504 loan and how do I apply?
The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with longterm, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. The Small Business Administration has a free referral service tool called Lender Match to help find a lender near you.
What is a microloan and how do I apply?
The Microloan Program provides loans up to $50,000 to help small businesses and certain not-forprofit childcare centers to start up and expand. The average microloan is about $13,000. These loans are delivered through mission-based lenders who are also able to provide business counseling. The Small Business Administration has a free referral service tool called Lender Match to help find a microlender near you.
Employee Retention Credit
The employee retention credit is a refundable tax credit for employers of all sizes who hang on to their workers throughout the pandemic.
It is a 50 percent credit on up to $10,000 in wages per employee, meaning the credit will be for up to $5,000 per worker. It’s available on wages paid between March 12, 2020 and January 1, 2021. Companies can file with the IRS for an advance payment on the credit.
Companies are eligible if they were ordered by the government to either fully or partially close or if they experience a 50% or greater drop in gross receipts. Eligible businesses with fewer than 100 workers can claim the credit even if their employees kept working throughout the crisis.
This credit is NOT available to companies that take out a PPP loan.
Governor Baker has created a resources page with Massachusetts-specific guidance information for employers. Important updates include:
On Wednesday, March 18, the Baker-Polito Administration announced administrative tax relief measures for small local businesses which have been impacted by the ongoing COVID-19 outbreak, especially in the restaurant and hospitality sectors. This tax relief includes postponing the collection of regular sales tax, meals tax, and room occupancy taxes that would be due in March, April and May so that they will instead be due on June 20. Additionally, all penalties and interest that would otherwise apply will be waived.
Governor Baker has also issued an emergency order requiring all businesses and organizations that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to workers, customers and the public. These businesses are encouraged to continue operations remotely. Businesses and organizations should check this list to find out if they are defined as providing “COVID-19 Essential Services” under this emergency order.
The United States Department of Labor has created a resources page to help employers understand their obligations under the legislation Congress has passed.
You can find fact sheets and frequently asked questions here.
My team and I are here to help.
If you have any questions or need additional help, please know that my staff are standing by and ready to assist you in whatever way we can.
We are working closely with the Massachusetts Office of the Small Business Administration to ensure that small businesses in Central and Western Massachusetts are being helped in every way possible.
I want to thank everyone playing a role in keeping our community safe, from essential businesses and workers to those staying at home to stop the spread of the coronavirus. We will overcome this challenge. And when we do, I hope we look back at this time and remember the millions of people working together to meet this moment with strength and perseverance. The selfless courage, camaraderie, and concern for one another we see on display right now is who we are as Americans. We should all take pride in that.
